Recently I was wondering if using a synthetic ETF would be a more cost effective way to invest in less liquid markets. Before doing that, I wanted to consider the risks too. My two worries are:
Counterparty risk: Considering all the rules on collaterals and splitting the risk, is in your opinion still a real problem?
Professional investor: Being those ETF swap-based I was wondering if from a fiscal point of weiw they are considered stocks or might be considered derivatives and trigger the possibility of being considered a professional investor according to condition 5 of the Federal guidelines on the topic.
What do you think? And do you see other risks that I did not mention?